McConnell Economics, Chapter 4

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Jin+Guice
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Joined: Sat Jun 30, 2018 8:15 am

McConnell Economics, Chapter 4

Post by Jin+Guice »

Discussion of the curriculum McConnell, Brue, Flynn Economics text, chapter 4.

Jin+Guice
Posts: 729
Joined: Sat Jun 30, 2018 8:15 am

Re: McConnell Economics, Chapter 4

Post by Jin+Guice »

Chapter 4 covers the market system. It starts out by laying out some of the things which are necessary for a functioning competitive market. It specifies that the market system relies on private ownership of property and freedom of "enterprise" (freedom to start or discontinue any productive enterprise) and "choice" (freedom to consume or not consume any product).

The book then discusses our economy's reliance on capital goods and specialization (of both labor and land) as well as the role of money in the economy (a medium of xxxchange).

The next section of this chapter discusses the balancing and selecting mechanism of the market, which is its primary function. Through the profit motive, producers are coerced to make products consumers want using the most efficient technology and distribution of various resources. Consumers communicate their preferences through their purchases, limited by their budget constraints.

The market mechanism encourages innovation, as newer more efficient technologies will yield a higher profit, thus the profit motive also drives innovation.

white belt
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Joined: Sat May 21, 2011 12:15 am

Re: McConnell Economics, Chapter 4

Post by white belt »

This chapter to me read as an advertisement for free market capitalism. I think it's good to understand the assumptions and why (on paper) free market capitalism is the be all end all. Again, I found myself questioning free market capitalism in theory vs in practice. I hope in a later chapter we will explore what causes governments to interfere in free market capitalism.

I apologize for most of my chapter discussions being pretty critical. I find myself much more skeptical and cynical studying economics now than I was when I took courses in high school and college.

Polp
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Joined: Sat Mar 14, 2020 11:20 am
Location: Valencia, Spain

Re: McConnell Economics, Chapter 4

Post by Polp »

I watched most of this MIT microeconomics video lecture a couple of weeks ago (however, I want to study it actively soon). I found it very helpful because the professor makes you think about the topics as well.

https://ocw.mit.edu/courses/economics/1 ... economics/

Maybe it inspires you, I liked it a lot.

Jin+Guice
Posts: 729
Joined: Sat Jun 30, 2018 8:15 am

Re: McConnell Economics, Chapter 4

Post by Jin+Guice »

@whitebelt: Yeah... the attitude in most econ books is pretty lame. It's worth learning the models, their strengths and their flaws if you want to be part of the conversation.

It's kind of amazing that the MIT stuff is available for free. I haven't explored it yet though...

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